Brazilians courting China as market for farm products

Jose Sergio Osse | May 05, 2006

The United States isn't the only country looking to take advantage of China's demand for agricultural products. A commission from the Brazilian Agriculture Ministry went to China at the beginning of March to settle sanitary and phytosanitary matters for a possible increase in commerce between the two nations. The main objective was to obtain a definitive certification of Brazilian transgenic soybeans for export to that country and to sign a protocol with the Chinese Quarantine Ministry.

This is another step Brazil is taking to broaden its agricultural export markets. Agreements in commerce could yield not only exceptionally rewarding contracts in the gigantic Chinese market, but also work as a kind of international truce between the two countries when it comes to fighting over new opportunities.

The certification on Brazilian genetically modified soybeans is granted annually by the Chinese government after a series of testing and verification procedures. These tests are the reason why during some periods of the year, Brazilians aren't allowed to export their transgenic soybeans to China. With a permanent export certification, though, the process of selling to Chinese importers could be eased and exports could rise.

Although not all Brazilian states allow transgenic crops, some of the major producers, such as Mato Grosso and Rio Grande do Sul, have seen the number of GMO fields rise in the last few years due to lower production costs and higher yields.

Farmers are divided in the second major producing state in the country, Paraná, where GMO crops are not allowed. But all agree that with a guaranteed market for transgenic crops and lower costs along with higher yields, there would be pressure on the state government to approve them.

The certification with China and the export boost expected to come with it could jump start the process. And, with all Brazilian states competing for China's market, overall exports could rise considerably, kicking big international competitors out of the way.

South American officials are very optimistic about the outcome. Chinese officials visiting Brazil have previously stated that Brazil is a reliable exporter and is price competitive, for both GMO and non-GMO soybeans. These signs boost Brazilians' confidence in their request for a permanent export certification.

Also on the table during the diplomats' visit was the signature of a protocol with the Chinese government which could fuel further commercial agreements between the two nations.

The protocol, an agreement for both countries to work on information exchange and cooperation, is regarded as a major improvement in the Brazil-China relationship and could ease commercial negotiations, according to Denise Euclydes, national coordinator for Brazil's International Exchange in Agriculture Ministry. These adjustments, she says, could allow faster and swifter negotiations and, in the end, speed commercial deals that today mostly stall in bureaucratic red tape.

The protocol could also be a roadmap to stronger bilateral commerce and an incentive to open new markets for the two countries' products, especially in agriculture.

Brazil supported China in its efforts to join the WTO (World Trade Organization), and the gamble has paid off. With China in the WTO, Brazil has gained an important ally in negotiations involving trade matters.

In 2005, Brazil has exported over 7.1 million metric tons (236 million bushels) of soybeans to China, about 31 percent of its overall grain exports, and an increase of 26.7 percent over the previous year's 5.6 million metric tons. China imports 25 million metric tons annually, almost half of which, 12 million metric tons (440 million bushels), comes from the United States.

Jose Sergio Osse is a Brazilian agricultural journalist and owns a public relations firm in Sao Paulo. He has worked as a press advisor for Syngenta, Brazil, and as an agricultural reporter for the country's major newspaper.